Surat luxury car dealers under IT scanner for not paying TCS

After one per cent tax collection at source (TCS) on luxury cars priced above Rs 10 lakh was made mandatory from June 1, 2016, the TDS section had asked the car dealers to deposit the tax.September 14, 2016, 17:44 IST

SURAT: Dealers of hi-end and luxury cars in the Diamond City have come under the scanner of Surat's tax collected at source (TDS) section of income tax (I-T) department.

After one per cent tax collection at source (TCS) on luxury cars priced above Rs 10 lakh was made mandatory from June 1, 2016, the TDS section had asked the car dealers to deposit the tax. The one per cent tax collection at source (TCS) on luxury cars priced above Rs 10 lakh was announced by Union finance minister Arun Jaitley in the budget for 2016-17.

However, only a few dealers of luxury cars had deposited the TCS, while many are yet to do so. Official sources said the tax is to be collected on ex-showroom price. The dealer will have to collect and pay it to the central government.

A meeting in this connection was organized by the TDS section of income tax department with around 30 dealers of luxury cars in the city on Monday. The dealers stated that the TCS requires some additional upfront payment from the customer. Coupled with increasing administrative hassles, it could impact ease of doing business.

"It is the responsibility of the car dealers to collect the tax at source and deposit with the government. However, very few dealers have been doing this, while rest are yet to follow the rule. However, a meeting was organized to sensitize the dealers on the TCS payment," said an I-T officer.

In his budget speech, Jaitley had said: "I also propose to collect tax at source at the rate of 1 per cent on purchase of luxury cars exceeding the value of Rs10 lakh and purchase of goods and services in cash exceeding Rs 2 lakh."